New Fed Chair Kevin Warsh Wants to Blow Up the Playbook That's Kept Stocks Rising for 15 Years. Here's What Investors Should Do Now.

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• Kevin Warsh wants to aggressively reduce the Fed's balance sheet and believes the Fed should use interest rates rather than its balance sheet as a policy tool.

  60% confidence

• Warsh's desire for a smaller Fed balance sheet means that the Fed Put is somewhat deeper out of the money but remains present in the event of a real crisis.

  60% confidence

• The Fed's balance sheet disproportionately helps those with financial assets.

  60% confidence

• Stock Advisor has a total average return of 993% compared to 207% for the S&P 500.

  60% confidence

• A shrinking Fed balance sheet won't be catastrophic; markets will adapt over time to any changes under Warsh's leadership.

  60% confidence

• Investors should reduce exposure to QE-dependent stocks, increase exposure to financials like Berkshire Hathaway, shift bonds to shorter durations, build cash, and maintain a long-term perspective.

  60% confidence

• Tech stocks with sky-high earnings multiples could see their valuations reduced as higher discount rates are applied to their projected future earnings if the Fed reduces its balance sheet.

  60% confidence

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